Best 5 ASX Stocks to watch in July 2021
We spotlight five ASX-listed companies that investors and traders may consider worth watching in the month ahead.
In the last month the ASX 200 benchmark has risen 139 or 1.95%, finishing out Tuesday’s session at the 7,301 point level.
With equity markets buoyant, below we look at 5 ASX-listed stocks that investors and traders may consider watching in the month(s) ahead.
Ultimately, we highlight the reasons why these stocks have found favour with one broker or another, as well as touch on recent operational highlights or key developments.
Top 5 ASX Stocks to watch this month
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Bapcor (ASX: BAP)
The Bapcor share price has proven volatile in calendar 2021, dropping sharply in both February and May. Despite that, the stock is up close to 7% year-to-date and the company recently revealed a new set of strategic targets, set over a five year period.
Centrally, as part of that strategy refresh, Bapcor is looking to increase its physical store footprint, expand more aggressively into Asian, and optimise its supply chain.
Analysts from Citi responded positively to that update, noting that ‘the company has an abundance of medium to long term growth opportunities which should help it grow in FY22 as it cycles favourable changes to consumer mobility and retail conditions.’
Overall, the investment bank has $9.55 price target on BAP and a Buy rating.
Qantas (ASX: QAN)
Despite a highly recognisable brand and market leading position, the pandemic had an inescapably negative impact on Qantas, with its stock smashed as fleets were grounded and borders closed.
Yet as reopening efforts grow and the prospect of vaccinated populations improve, optimism around the name has returned, if only a little.
Indeed, despite the stock being down ~7% YTD, many analysts remain constructive on the name.
Morgan Stanley, for example, recently reiterated an Overweight rating and $7.00 price target on the blue-chip carrier, noting that the stock trades ‘~15% below its pre-COVID market capitalisation, retaining upside to a "generic" COVID recovery. But we believe even this would be overly punitive.’
The investment bank believes the airline will see a normalisation of earnings in FY24, while also positively saying that the airline should be cashflow positive regardless of the recovery in international travel.
Life360 (ASX: 360)
A provider of family safety services to its clients, Life360 is one of a growing list of companies to be based in the US but listed on the ASX.
Life360 has a relatively high profile, in part owing to Randi Zuckerberg – a relative of Mark Zuckerberg – sitting on the company’s board.
More substantially, analysts from Morgan Stanley described the company as having a ‘user base of unparalleled scale and engagement’ for a company of its size, while also noting that ‘longer term we expect Life360 to further lift the value proposition, driving stronger unit economics as it expands globally.’
The investment bank has an Overweight rating and $8.60 price target on Life360.
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Woolworths (ASX: WOW)
It’s been a busy period for Woolworths, with the company in June completing the divestment of Endeavour Group – the company’s hotels and drinks business. Endeavour is now separately listed on the ASX under the ticker EDV, which last traded at $6.20 per share.
Following the Endeavour spin-off, Morgan Stanley continues to like Woolworths, rating the stock Overweight and assigning it a price target of $44.00 per share.
For income-focused investors, Woolworths recently flagged the potential to return between $1.6 billion to $2.0 billion to investors following the demerger. Looking forward, Morgan Stanley believes that if the company was to return capital to investors, it would be at the top-end of that range.
Boral (ASX: BDL)
Like Woolworths, June proved to be a busy month for building materials company Boral – with the company revealing it had entered into an agreement to sell its North American Building Products business.
Boral shareholders also continued to be courted by Seven Group Holdings, who have progressively upped their takeover bid for the company over the last month, with the cash offer price last standing at $7.30 per share.
Macquarie sees the company as more valuable than that, assigning the stock an Outperform rating and $7.80 price target.
Overall, despite noting that there were a number of moving parts to their thesis, Macquarie analysts said ‘at the core of it, we think the Transformation Plan, recovering infrastructure activity and the prospect of further significant capital returns combine in an attractive thesis.’
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